What are personal income tax rates for business households and individuals in Vietnam?
What are personal income tax rates for business households and individuals in Vietnam?
The personal income tax rate for business households and individuals is detailed for each field and profession as guided in Annex 1 issued together with Circular 40/2021/TT-BTC as follows:
| Category | VAT Percentage Rate | PIT Rate |
| Distribution, Supply of Goods | ||
| - Wholesale and retail activities of various kinds of goods (excluding the value of goods sold at the correct price with a commission); - Bonuses, support for achieving sales, promotions, commercial discounts, payment discounts, support payments in cash or in kind for contract households; |
1% | 0.5% |
| - Distribution and supply of goods not subject to VAT, non-taxable VAT, subject to 0% VAT under VAT law; - Business cooperation activities with organizations in this sector whereby the organization is responsible for VAT declaration on all revenue from the cooperation activity as per regulations; - Bonuses, support for achieving sales, promotions, commercial discounts, payment discounts, support payments in cash or in kind for contract households associated with the purchase of goods and services subject to non-VAT, non-taxable VAT, subject to 0% VAT under VAT law; - Contract violation compensation, other compensations. |
- | 0.5% |
| Services, Construction without Providing Raw Materials | ||
| - Accommodation services include: Providing short-term lodging facilities for tourists, other travelers; providing long-term lodging facilities not being apartments for students, workers and similar subjects; providing lodging facilities accompanied by dining services or entertainment means; - Goods loading and unloading services and other supportive activities related to transportation such as yard business, selling tickets, vehicle parking and guard services; - Postal services, mail and parcel delivery services; - Brokerage, auction services, and agency commissions; - Legal, financial, accounting, auditing consultancy services; administrative tax and customs service procedures; - Data processing services, portal leasing, IT and telecommunication equipment leasing; advertisement on digital content products and services; - Office support services and other business support services; - Sauna, massage, karaoke, dance hall, billiards, internet, and gaming services; - Tailoring, laundry; hairdressing, hair washing services; - Other repair services including: Repair of computers and household appliances; - Construction consultancy, design, basic construction supervision; - Other services subject to VAT calculated by deduction method with a VAT rate of 10%; - Construction, installation without providing raw materials (including industrial machinery and equipment installation); |
5% | 2% |
| - Provision of services not subject to VAT, not required to declare VAT, subject to 0% VAT under VAT law; - Business cooperation activities with organizations in this sector whereby the organization is responsible for VAT declaration on all revenue from the cooperation activity as per regulations; - Contract violation compensation, other compensations; |
2% | |
| - Property leasing including: + Leasing houses, land, shops, factories, warehouses excluding accommodation services; + Leasing transportation means, machinery and equipment without operators; + Leasing other assets without attendant services; |
5% | 5% |
| - Lottery agents, insurance agents, multi-level sales agents; - Contract violation compensation, other compensations. |
- | 5% |
| Manufacturing, Transportation, Services with Goods, Construction with Raw Materials | ||
| - Manufacturing, processing, and processing of goods; - Mineral exploitation and processing; - Goods transportation, passenger transportation; - Services accompanying goods sales such as training services, maintenance, technology transfer with the sale of products; - Dining services; - Repair and maintenance of machinery, equipment, transport means, cars, motorcycles, and other motor vehicles; - Construction, installation with raw materials (including industrial machinery and equipment installation); - Other activities subject to VAT calculated by the deduction method with a VAT rate of 10%; |
3% | 1.5% |
| - Activities not subject to VAT, not required to declare VAT, subject to 0% VAT under VAT law; - Business cooperation activities with organizations in this sector whereby the organization is responsible for VAT declaration on all revenue from the cooperation activity as per regulations. |
- | 1.5% |
| Other Business Activities | ||
| - Manufacturing activities of products subject to VAT calculated by deduction method with a VAT rate of 5%; | 2% | 1% |
| - Provision of services subject to VAT calculated by the deduction method with a VAT rate of 5%; | 2% | 1% |
| - Other activities not listed in the above groups 1, 2, 3; | 2% | 1% |
Note:
- In cases where business households and individuals engage in multiple fields or professions, the household or individuals must declare and calculate taxes based on the tax rate on revenue applied to each specific field or profession.
- In cases where business households and individuals cannot determine the taxable revenue for each field or profession or determine it inaccurately compared to the actual business situation, the tax authority will impose the taxable revenue of each field or profession as per regulations on tax administration.
What are personal income tax rates for business households and individuals in Vietnam? (Image from the Internet)
What is the formula for calculating personal income tax for business households and individuals in Vietnam?
Based on Article 10 Circular 40/2021/TT-BTC, the amount of PIT payable by business households and individuals is determined using the following formula:
PIT Amount Payable = Taxable Revenue x PIT Percentage Rate
Details:
- Taxable revenue for business households and individuals is the revenue including tax (applicable in cases subject to taxation) of all sales, processing money, commissions, service provision revenues arising during the tax period from production, business activities, including bonuses, support for achieving sales, promotions, trade discounts, payment discounts, support payments in cash or in kind; price supports, surcharges, overcharges, additional fees enjoyed according to regulations; contract violation compensation, other compensations (only counted in taxable PIT revenue); other revenues that business households and individuals enjoy regardless of whether money has been collected or not.
- VAT percentage rate refers to the PIT rate specified in section 1.
What are methods for determing personal income tax for business households and individuals in Vietnam?
Based on Article 3 Circular 40/2021/TT-BTC, personal income tax for business households and individuals is calculated by the following methods:
- Declaration method: This is the method of tax declaration and calculation based on the actual revenue generated on a monthly or quarterly basis.
business households and individuals paying tax under the declaration method are large-scale business households and individuals; business households and individuals not meeting large-scale criteria but opting to pay tax under the declaration method.
- Tax declaration method for each occurrence: This is the method of tax declaration and calculation based on the actual revenue of each specific occurrence.
Individual businesses paying tax per occurrence are those engaging in non-regular business activities and without a fixed business location.
- Lump-sum method: This is the tax calculation method based on a fixed percentage on the estimated revenue determined by the tax authority to calculate the lump-sum tax amount as stipulated in Article 51 of the Tax Administration Law 2019.
business households and individuals paying tax under the lump-sum method are those not implementing or inadequately implementing accounting, invoicing, documentation policies, except for business households and individuals under the declaration method, and individual businesses under the per occurrence method.
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